Pipeline problem leaves Ontario short of ethylene

26 May 2006 17:15[Source: ICIS news]

TORONTO (ICIS news)--The suspension of ethylene (C2) shipments on the Cochin pipeline from Alberta is leaving Ontario's Sarnia petrochemicals hub with a C2 deficit of some 92,000 tonne/year, a top Canadian petrochemicals analyst said on Friday.

BP announced in March it was suspending ?xml:namespace>Cochin’s C2 shipments until at least the autumn of 2007 to examine the US portion of the line for stress-corrosion cracking problems, and upgrade it where necessary.

The 1,900-mile, 12-inch-diameter pipeline moves petrochemicals from Alberta, through the US Upper Midwest, and into Ontario.

Pipeline pressure has been limited to about 900 pounds/square inch to ensure an appropriate safety margin and thus ehylene, which has a higher vapour pressure than the products shipped on the pipeline, is not being transported.

The situation is squeezing Dow's and Imperial Oil’s downstream operations at Sarnia while Nova Chemicals will have enough C2 feedstock for its polyethylene and styrene monomer facilities, John Cummings, an analyst with Toronto-based Canadian C2+ Petrochemical Report said in a research note to clients.

According to Cummings’ calculations, Dow, Imperial and Nova require C2 feedstock of some 1.228m tonne/year to feed their downstream units in southern Ontario.

However, following the Cochin suspension there will only be some 1.136m tonne/year in C2 supply at Sarnia, even after the recent expansion of Nova’s Corunna flexi-cracker there. Nova’s capacity from the expanded flexi-cracker is 876,000 tonne/year, “at the top end of the range,” while Imperial’s Sarnia cracker has a capacity of some 260,000 tonne/year, Cummings said.

This has Dow and Imperial Oil “in the unfortunate position of having to compete with each other for Nova’s spare C2,” Cummings said.

While Imperial can at least supply part of its C2 requirements from its own Sarnia cracker, Dow is totally dependent on C2 from either Cochin or Nova.

One option may be for Dow to temporarily shut down its low-density polyethylene plant at Sarnia until Cochin resumes C2 shipments, Cummings said.

On the other hand, Cochin may never return to carrying C2 as BP may well decide that the cost of upgrading and re-rating Cochin to the higher pressure required for C2 is too high, he added.